Personal finance

Want to put bitcoin in your IRA? Why experts say you may want to rethink that

When deciding where to put your money, one thing to remember is the purpose of the account you’re using to invest, Kinahan said. For IRAs, typically that purpose is not to lose money.

“Particularly when it comes to your retirement, you want to make sure that the money you sweat out to earn is at that same level or hopefully significantly higher when you retire,” Kinahan said.

As such, separate margin or trading accounts that are not dedicated to retirement may be a better place to add riskier assets.

If you still are convinced you want cryptocurrencies in your IRA, limit your exposure to 5%, Slott said.

“You get a taste of it in there,” Slott said. “If it goes up, that’s great.

“If you lose your money, it’s not the worst thing in the world, because it’s a very small percentage of your retirement portfolio.”

However, if you’re thinking of just dabbling with a 0.5% or 1% allocation, it’s probably not worth the time and effort, Ross said.

Also be sure to consider your time horizon. The closer you are to retirement, the less risk you can generally afford.

“The volatility, I think, is too much for somebody approaching retirement or already there, because they may not have enough years to recover if the investments, whether it’s bitcoin or any kind of crypto, tanks,” Slott said.

Still, if you’re determined to add cryptocurrencies to an IRA, a Roth IRA is preferable if you expect a large upside over the years because the appreciation would be tax-free, Slott said.

Ross, for his part, agrees.

“That’s the best house in a bad neighborhood,” he said.

If you still are convinced you want cryptocurrencies in your IRA, limit your exposure to 5%, Slott said.

Source: https://nypressnews.com/news/finance/personal-finance/want-to-put-bitcoin-in-your-ira-why-experts-say-you-may-want-to-rethink-that/

Donovan Larsen

Donovan is a columnist and associate editor at the Dark News. He has written on everything from the politics to diversity issues in the workplace.

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